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Tech-Bank N26 Not Planning to Postpone IPO

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Tech-Bank N26

The German smartphone bank N26 has announced that despite the Corona crisis it is sticking to its plans to go public in the next 4 to 5 years. Now the chief financial officer has announced a concrete timetable.

N26 during COVID-19

The coronavirus crisis is leaving its mark on N26. Customers are shopping less with their cards and the mobile phone bank is no longer growing as strongly, as N26’s CFO Maximilian Tayenthal explained in an interview with Bloomberg. An initial public offering is still being considered.

“Our customers’ card sales in March have so far declined slightly. In certain markets, we are seeing a decline in account openings of no more than ten percent,” he said.

In the long term, however, the crisis could have a positive effect on the company. Tayenthal: “We assume that many people will open an online account because more and more branches are closing due to the corona crisis. Digital banks will become much more important.”

To slow down the spread of the virus, Deutsche Bank, for example, plans to temporarily close about 200 branches to customer traffic starting Tuesday.

N26 – One of the most valuable Fintechs in Europe

The Berlin-based smartphone bank offers a state-of-the-art digital banking experience alongside an all in one banking app. As stated in a review by Universal Hires, N26 is revolutionizing consumer banking.

It’s wort mentioning that N26 has been founded only 7 years ago and got off to a great start: In 2015, the banking app developed by the company’s founders, then still under the name Number26, was launched in Germany and Austria. France, Greece, Ireland, Italy, Slovakia and Spain followed in the same year.

By 2016, the company had already passed the 100,000 customer mark. In the same year, Number26 was granted a full banking license by the European Central Bank and has been operating under the name N26 ever since. Until then, the company had conducted its business via the payment service provider Wirecard.

In several financing rounds, the Berlin-based Fintech was able to raise a total of 670 million US dollars. In the last round, which took place in July 2019, N26 was valued at USD 3.5 billion, making it the most valuable German start-up.

This year, N26 has already passed the 5 million customer mark. A team of now more than 1,500 employees serves 25 markets from offices in Berlin, New York, Barcelona, Vienna and São Paulo. In addition to real-time banking via app and a debit mastercard, N26 also offers small loans and insurance via app.

Setbacks Along The Way

However, the Fintech had to cope with some setbacks. In 2016, after N26 had terminated the account of more than 400 customers because of too frequent cash withdrawals, criticism was rife. In May 2019, the Berlin data protection commissioner imposed one of the highest penalties to date on N26 for breaches of the basic data protection regulation.

In the same month, the financial supervisory authority Bafin found far-reaching deficiencies in N26’s precautions against money laundering and terrorist financing and ordered that these be remedied immediately.

Pull out of Great Britain

N26 is currently in the process of withdrawing from the British market. Hundreds of thousands of accounts are to be closed by April 15.
The reason given for the move was the brexite and the associated need for a banking licence. The company is continuing in the USA, but has to cope with the departure of the local boss there.

N26’s business largely resistant to COVID-19

During the interview with Bloomberg, Tayenthal also made it clear that the Fintech is only marginally affected by the negative consequences of the Corona crisis: “Our customers’ card sales in March have so far declined slightly. In certain markets, we are seeing a decline of no more than 10% in account openings.

According to Tayenthal, N26 may even benefit from the crisis in the long term: We expect that many people will open an online account as more and more stores close due to the corona crisis. Digital banks will become much more important.

An Outlook

As the IPO of N26, as recently announced, will only take place in 4 to 5 years, interested investors will have some time to observe the further development of the company.

In principle, I consider the purely app-based business model of the Berlin-based Fintech to be an interesting addition to the banking industry. So you should definitely put N26 on your watch list.

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